Revive Sick Industries

One factor hindering rapid economic growth in Nepal is the weak industrial base. While some public enterprises are running at loss worth billions of rupees, a number of big industries have been shut down for decades. The country needs to develop heavy or light industries to employ youth who are forced to migrate to foreign nations for better job prospects and study. It is estimated that over 500,000 persons enter the job market annually. But fewer than 100,000 youths can get employment within the country. This is a reason why more than 1,500 people leave for employment abroad daily. Widespread unemployment is the most visible problem arising from the lack of industries. The weak manufacturing has also caused other structural problems in the economy - soaring trade deficit, imbalance in the balance of payments, inadequate revenue collection and low budget for development.

This pessimistic scenario compels us to operate new industries or revive the old ones based on the needs and capacity of the state. Those industries now defunct once ran smoothly, fetching a significant amount of revenues to the country. But mismanagement, overstaffing, trade unionism and political interference led to their collapse. In the recent past, there were some efforts to reopen them but they came a cropper. With the new government in place, initiatives have been taken to this end. According to a news report, published in this daily on Sunday, the Ministry of Finance (MoF) has started conducting detailed audit and property assessment of seven large industries – Udayapur Cement Industry, Gorkahkali Rubber Industry, Janakpur Cigarette Factory (JCF), Nepal Metal Company (NMC), Butwal Spinning Mills (BSM), Hetauda Textile Factory (HTF) and Nepal Orient Magnesite (NOM). It has been suggested to operate them on the public-private partnership (PPP) model. 

The authorities have said that mine-based industries such as Udayapur Cement, Orient Magnesite and Nepal Metal have the potential for revival based on the preliminary estimation of the Department of Mines and Geology (DoMG). Likewise, the Ministry of Industry, Commerce and Supplies (MoICS) has selected a consulting firm S. & S. Associates to assess the status of the four industrial establishments – JCF, BSM, NMC and NOM.  Each sick industry has its specific problems. For instance, Udayapur Cement Industry that was running intermittently until February this year has been unable to pay the salary of nine months to the staff. Its coal-based technology has obstructed in upgrading production. When the government tried to evaluate property to privatise or run under the PPP model, the locals objected to the move, accusing that it was selling the factory at dirt cheap price. 

A lack of modern technology, huge investment and smart management, and old equipment are some immediate issues that must be dealt with. The PPP model has been widely accepted but integrative approach and market assurance are necessary to motivate the prospective investors. One motivating element is the availability of physical infrastructure and land of sick industries. Investors have to spend a huge amount on purchasing land and managing basic industrial facilities. These enterprises hold huge potential to create jobs and substitute imports, thereby minimising the volumes of foreign trade bills. Focus should be on overcoming the maladies that made those industries sick. The present government under Prime Minister Balendra Shah has accorded priority to the domestic industries. During his poll campaign, he had urged the people to consume domestic agro products and promote the national economy. Thus, effective measures need to be taken to revive and run them.